Appraisals: The Real Deal Maker

By Joe Agee 

You’ve had your home on the market a couple of weeks and right out of the blocks you get a great offer, 98% of your list price. You’re smiling all the way to the bank. But the offer includes a clause that states, “Subject to appraisal,” which means the buyer is going to have your home appraised to see if in fact it will appraise for the selling price. If it doesn’t, no deal; or, you have the option to renegotiate at a lower purchase price.

Let’s say the buyer does not include a “Subject to appraisal” clause in the contract, but has a financing contingency (purchase is subject to buyer getting approved for a loan), for 80% of the purchase price (ex: $400,000 home would require a $320,000 loan). The buyer must get approved for the loan based on the contract price. The buyer’s lender contacts a licensed appraiser who completes an appraisal of the home to verify it’s “real value” by taking into consideration, past like-property closed sales, value trends, property replacement cost, land values, etc.

If the appraisal comes in at $380,000, compared to the contract price of $400,000, the buyer will now only be able to borrow 80% of $380,000 instead of $400,000, which will then require a greater downpayment to purchase the home. As the real estate market fluctuates, appraised values can go up and come down. A home that was appraised in May of 2005 may be valued less today based on recent closed sales of similar homes.

If your contemplating selling your home and you don’t know what the value is, you can ask a realtor for their opinion based on recent sales activity. Real estate agents have a tendency to be a bit more optimistic, but they have access to valuable information that will be helpful. But, if you want the “real deal” hire an appraiser to evaluate the value of your home and provide you a “bankable” number. Having an appraisal will help you in pricing your home (you can always have a higher asking price) and it will give you an accurate assessment of what your home is worth “today.” Appraisals generally start around $350 to $400.

— About the Author —

Joe Agee is the owner of Hilton Head Luxury Homes
You can reach Joe at 843-842-3000 or by e-mail at

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